Australia Medicare Levy & Medicare Levy Surcharge (MLS) Calculator
Estimate both Medicare-related taxes in one place: the 2% Medicare levy (with the 2024-25 low-income reductions) and the 1-1.5% Medicare Levy Surcharge charged to higher earners without private hospital cover - then check whether buying hospital cover would actually cost less than paying the surcharge.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Medicare levy | Medicare Levy Surcharge (MLS) | Combined Medicare-related tax |
|---|---|---|---|
| $65,000 single - levy only, no MLS | $1,300.00 | $0.00 | $1,300.00 |
| $70,000 single - the standard 2% levy | $1,400.00 | $0.00 | $1,400.00 |
| $30,000 single - low-income shading | $400.00 | $0.00 | $400.00 |
| $100,000 single, no hospital cover - MLS tier 1 | $2,000.00 | $1,000.00 | $3,000.00 |
| $130,000 single, no cover - MLS tier 2 | $2,600.00 | $1,625.00 | $4,225.00 |
| $160,000 single, no cover - MLS tier 3 | $3,200.00 | $2,400.00 | $5,600.00 |
| Couple, 2 kids, $120k + $90k, half-year uncovered | $2,400.00 | $601.64 | $3,001.64 |
How This Calculator Works
Set your tax year, taxable income and income for MLS purposes (the wider ATO figure that adds back fringe benefits, reportable super and investment losses). Pick single, couple or sole parent - couples and sole parents are tested against family thresholds, and a spouse's MLS income is combined with yours. Then answer the cover questions: whether you hold private hospital cover, whether its excess is within the MLS caps, and how many days of the year you were without appropriate cover. The tool returns three things side by side: your Medicare levy (applying the low-income exemption and 10% shading rules), your Medicare Levy Surcharge (tier, threshold and day-by-day pro-rating shown), and a break-even line comparing a real hospital-cover premium against the full-year MLS you would avoid.
The Formula
Medicare Levy + Medicare Levy Surcharge (ATO 2024–25)
The low-income threshold depends on single/family status, SAPTO and dependent children; the MLS tier (0%, 1%, 1.25%, 1.5%) depends on combined income for MLS purposes against single or family thresholds
Worked Example
A single person on $130,000 with no hospital cover pays twice: the Medicare levy of $2,600 (2% of taxable income) plus the Medicare Levy Surcharge of $1,625 (tier 2, 1.25%, because $130,000 sits between $113,001 and $151,000) - $4,225 of Medicare-related tax in total. If basic appropriate hospital cover costs $1,800 a year, paying the MLS is still about $175 cheaper in pure dollars - but at $160,000 the MLS rises to $2,400 (1.5%) and the same policy saves about $600 a year. Now a family example: a couple with two children earning $120,000 and $90,000 has family MLS income of $210,000 against a threshold of $195,500 ($194,000 + $1,500 for the second child), so the higher earner is in tier 1; if the family only held hospital cover for half the year (183 days uncovered), the surcharge is pro-rated to about $602 on top of the $2,400 levy.
Key Insight
The Medicare levy and the Medicare Levy Surcharge are different taxes, and mixing them up is exactly how people end up shocked by an extra $1,000-$2,000 at tax time. The levy is near-universal: 2% of taxable income, reduced or removed only at low incomes (10% shading above the threshold) or via SAPTO. The MLS is avoidable: it only hits when your income for MLS purposes - a wider figure than taxable income - is above $97,000 single / $194,000 family AND you lack appropriate private patient hospital cover. Three traps drive most bad surprises. First, extras or ambulance-only policies feel like 'having private health' but do not count - only hospital cover with an excess within the caps ($750 single / $1,500 family) exempts you. Second, family status is assessed on combined income, and every family member (spouse and dependants) generally needs cover: one uncovered person for part of the year triggers pro-rated MLS days. Third, the MLS is charged from dollar one of your income once you cross the threshold - not just on the excess - so crossing $97,000 by a few hundred dollars can cost roughly $970, which is why salary-sacrificing into super near a tier boundary, or buying cover before 1 July, can beat doing nothing. Run your own numbers, then verify with the ATO or a tax agent.
Medicare Levy thresholds and shading (2024-25)
Standard rate: 2% of taxable income, charged once income exceeds the low-income threshold.
LOW-INCOME THRESHOLDS 2024-25 (indexed annually by the ATO).
Single: $26,000 full exemption; shade-out around $32,500.
Family: $43,846 (+$4,027 per dependent child); shade-out $54,807+.
Senior/Pensioner (SAPTO): $41,089 single; $57,198 family.
Shading mechanism: between the threshold and the shade-out point, levy = 10% × (income − threshold), capped at the full 2% of taxable income.
Example: single on $30,000 → levy = 10% × ($30,000 − $26,000) = $400 (instead of $600 at the full 2%).
Example: single on $50,000 → above the shade-out, levy = $50,000 × 2% = $1,000.
Family test: the threshold test uses combined family income, but the levy itself is charged on each person's own taxable income. Sole parents of dependent children use the family thresholds even without a spouse.
EXEMPTIONS (not modelled by this tool): foreign residents, Medicare Levy Exemption Certificate holders (certain visa classes, blind pensioners, some defence members), Norfolk Island residents, and part-year exemptions.
Medicare Levy Surcharge (MLS) - the avoidable 1-1.5%
MLS APPLIES only when BOTH are true: (1) income for MLS purposes is above the threshold AND (2) you lack appropriate private patient hospital cover for some or all of the year.
MLS INCOME THRESHOLDS 2024-25. Singles: $97,001 → 1%; $113,001 → 1.25%; $151,001 → 1.5%. Families: $194,001 → 1%; $226,001 → 1.25%; $302,001 → 1.5%.
Each dependent child after the first adds $1,500 to the family thresholds.
Income for MLS purposes = taxable income + reportable fringe benefits + reportable super contributions + net investment losses (negative gearing added back) + exempt foreign employment income.
The tier comes from COMBINED family income, but each partner pays the surcharge on their OWN income for MLS purposes.
Once you cross a threshold, the rate applies to your whole income base - not just the part above the line.
Part-year cover: the MLS is pro-rated by days without appropriate cover (rate × income × uncovered days ÷ 365).
What counts as appropriate hospital cover (and what does not)
COUNTS: private patient hospital cover from a registered Australian health insurer with an excess of $750 or less (singles) / $1,500 or less (couples, families).
DOES NOT COUNT: extras-only cover (dental, optical, physio), ambulance-only cover, overseas visitor or travel insurance, and hospital policies with an excess above the caps.
Whole-family rule: for family MLS purposes, you, your spouse and dependants generally all need appropriate cover - one uncovered family member accrues uncovered days.
Strategy notes: buying cover mid-year only stops the surcharge from that day forward; Lifetime Health Cover loading (2% per year of age past 30 when you first take hospital cover) is a separate long-term cost of waiting; pre-tax super salary-sacrifice raises income for MLS purposes rather than lowering it - but personal deductible contributions can lower taxable income while still being added back for MLS. Check both figures before acting.
Australia Medicare Levy & MLS thresholds 2024-25 (ATO)
Reference Medicare Levy and Medicare Levy Surcharge thresholds used by this calculator.
| Threshold | Single | Family |
|---|---|---|
| Medicare Levy exemption | $26,000 | $43,846 (+$4,027/child) |
| Medicare Levy shade-out | $32,500 | $54,807+ |
| MLS Tier 1 (1%) | $97,001 | $194,001 |
| MLS Tier 2 (1.25%) | $113,001 | $226,001 |
| MLS Tier 3 (1.5%) | $151,001 | $302,001 |
| SAPTO Medicare Levy exempt | $41,089 | $57,198 |
| Appropriate-cover excess cap | $750 | $1,500 |
Thresholds indexed annually by the ATO. Family MLS thresholds rise $1,500 per dependent child after the first; the family levy threshold rises $4,027 per child. MLS applies only for days without appropriate private patient hospital cover and is pro-rated by uncovered days ÷ 365. Income for MLS purposes adds reportable fringe benefits, reportable super contributions, net investment losses and exempt foreign employment income to taxable income.
Frequently Asked Questions
What is the difference between the Medicare levy and the Medicare Levy Surcharge?
They are two separate taxes. The Medicare levy is 2% of taxable income and almost everyone pays it (low-income earners pay less or nothing). The Medicare Levy Surcharge (MLS) is an extra 1%, 1.25% or 1.5% charged only to people whose income for MLS purposes is above $97,000 (single) / $194,000 (family) in 2024-25 AND who lack appropriate private hospital cover. A high earner without cover pays both - which is how a 'mystery' extra $1,000-$2,000 appears on an assessment.
I was charged about $1,300 extra at tax time - why?
That is the classic MLS signature: 1% of an income for MLS purposes around $130,000, or 1.25% of about $104,000. It usually means your income crossed the MLS threshold and the ATO found no appropriate hospital cover for some or all of the year. Check your income for MLS purposes (it adds fringe benefits, reportable super and investment losses to taxable income) and the cover dates your insurer reported.
I had private health insurance but still got the surcharge - how?
Almost always because the policy was not 'appropriate' hospital cover: extras-only (dental, optical, physio), ambulance-only and overseas visitor/travel policies do not count. A genuine hospital policy also fails if its excess is above the caps ($750 single / $1,500 couples and families). Only registered private patient hospital cover within the excess caps exempts you from the MLS.
Does my spouse's income count?
Yes. If you have a spouse or de facto partner you are assessed against the family thresholds on your combined income for MLS purposes - you cannot split back into two singles. Each partner is then charged the MLS on their own income at the family-determined tier. Note the whole family generally needs cover: if your partner or child is uncovered, MLS days accrue even if you are covered.
How do dependent children change the thresholds?
Two different uplifts apply. For the Medicare levy, the family low-income threshold rises by $4,027 for every dependent child. For the MLS, family thresholds rise by $1,500 for each dependent child after the first - so with two children the tier-1 family threshold is $195,500 instead of $194,000. Sole parents use the family thresholds too.
What if I only had hospital cover for part of the year?
The MLS is pro-rated by days: you pay the surcharge for every day you (or a family member who needed cover) did not hold appropriate hospital cover, at rate × income × uncovered days ÷ 365. Buying cover on 1 March does not wipe the surcharge for July-February - which is why buying before 1 July matters if you expect to cross the threshold.
Who pays less than the full 2% Medicare levy?
For 2024-25 you pay no levy if taxable income is at or below $26,000 (single) or family income is at or below $43,846 plus $4,027 per dependent child. Above the threshold the levy phases in at 10% of the income above it until that equals 2% of taxable income (around $32,500 single). SAPTO-eligible seniors and pensioners get higher thresholds: $41,089 single / $57,198 family.
What exactly is 'income for MLS purposes'?
A wider figure than taxable income: taxable income plus reportable fringe benefits, reportable (salary-sacrificed and personal deductible) super contributions, total net investment losses (negative gearing is added back), and certain exempt foreign employment income. This is why people whose taxable income sits below a tier can still be pushed over the MLS threshold.
Is private hospital cover cheaper than paying the MLS?
Run the break-even in this tool with a real quote. As a rule of thumb: a single on $100,000 owes $1,000 of MLS, so a $1,000-$1,300 basic policy is near break-even; at $160,000 the MLS is $2,400 and basic cover usually wins clearly. Below the threshold, cover is never needed to avoid MLS. Remember cover also buys hospital benefits and avoids Lifetime Health Cover loading (2% per year of age past 30), which this tool does not price in.
When is this calculator unreliable?
Near the family low-income thresholds (the ATO apportions the reduction between spouses; this tool uses one family-level test), for levy exemption categories (foreign residents, exemption-certificate holders, Norfolk Island), part-year Australian residency, and low-earning spouses near the own-income MLS floor. Thresholds are ATO 2024-25 and are indexed most years - selecting 2025-26 reuses 2024-25 figures and flags the result as provisional.
References & Authoritative Sources
- Australian Taxation Office (ATO) — Medicare Levy · consulted June 1, 2026 · Levy rate, low-income thresholds and reductions
- Australian Taxation Office (ATO) — Medicare Levy Surcharge · consulted June 1, 2026 · MLS rules and who pays
- Australian Taxation Office (ATO) — Income thresholds and rates for the Medicare Levy Surcharge · consulted June 1, 2026 · Single/family tiers and income for MLS purposes definition
- Australian Taxation Office (ATO) — Appropriate level of private patient hospital cover · consulted June 1, 2026 · Excess caps; extras/ambulance/travel cover excluded
- Department of Health and Aged Care (Australia) — Medicare · consulted June 1, 2026 · National health system
Related Calculators
Assumptions
- ATO 2024-25 thresholds and rates; selecting 2025-26 reuses them and flags the result as provisional.
- The spouse income entered (income for MLS purposes) is also used as the proxy for spouse taxable income in the family levy test.
- Appropriate cover means registered hospital cover with an excess within the MLS caps, held by the whole family unit for the covered days.
- A 365-day year is used for pro-rating.
Limitations & Disclaimer
This is an educational tool, not financial advice. It does not account for your personal circumstances, and no result is a guarantee.
- The ATO apportions the family low-income levy reduction between spouses; this tool applies a single family-level test, so couple results near the low-income thresholds are approximate.
- Medicare levy exemption categories (foreign residents, Medicare Levy Exemption Certificate holders, Norfolk Island residents) and part-year residency are not modelled.
- The own-income MLS exemption for low-earning spouses is approximated with the $26,000 single low-income threshold.
- Lifetime Health Cover loading, the private health insurance rebate, and HELP/other levies are out of scope.
- Not tax advice - confirm your position with the ATO or a registered tax agent.
Methodology & Review
Two ATO 2024-25 calculations in one tool. MEDICARE LEVY: min(2% × taxable income, 10% × income above the low-income threshold); thresholds — single $26,000, family $43,846 + $4,027 per dependent child, SAPTO $41,089 single / $57,198 family; the family test uses combined income while the levy is charged on the individual's own taxable income. MEDICARE LEVY SURCHARGE: tier from combined income for MLS purposes — single $97,001 (1%), $113,001 (1.25%), $151,001 (1.5%); family $194,001 / $226,001 / $302,001 with +$1,500 per dependent child after the first — charged on own income for MLS purposes and pro-rated by days without appropriate private patient hospital cover (÷365). Appropriate cover = hospital cover from a registered Australian insurer with an excess within the MLS caps; extras-only, ambulance-only and travel policies never count. BREAK-EVEN: full-year MLS avoided minus the entered annual premium. SIMPLIFICATIONS (estimate, not advice): the ATO's spouse-by-spouse apportioning of the family levy reduction is approximated with a single family test; the spouse income field (income for MLS purposes) is also used as the proxy for spouse taxable income in the levy test; the own-income MLS exemption uses the $26,000 single low-income threshold; levy exemption categories (foreign residents, Medicare-exemption certificate holders, Norfolk Island), part-year residency, Lifetime Health Cover loading and leap years are not modelled. Verify with the ATO or a registered tax agent.
Version history
- — Initial version: simple 2% percentage-of-income levy estimate.
- · 2.0 — Rebuilt as a combined Medicare levy + MLS calculator: family thresholds, dependent-child adjustments, SAPTO, appropriate-cover and excess checks, days-without-cover pro-rating, and a private-cover break-even comparison.
Updated